Question Debtor avoiding 341 Meeting in Chapter 7 - hoping for dismissal??

[Mistral]

Can someone avoid a 341 meeting or not show up in hopes of getting the involuntary Chapter 7 case dismissed?

I'm a creditor in a Chapter 7. The Debt was obtained by Fraud and in a Dissolution of Marriage so it should not be able to be discharged. In short the debtor committed Fraud and was caught and ordered by the Court to repay the Fraud. Now the debtor wants to get the BK case dismissed in order to avoid repaying their fraud debt through bankruptcy court.

The Chapter 7 debtor has requested and received, the 4th continuance to the 341 meeting. The 341 meeting that was initially due in April is now continued to June.

Is the Debtor just hoping to get this dismissed since a discharge of the debts is likely not possible?

Is there any way to prevent a dismissal if the debtor fails to ever show at the 341 meeting?

Why else would the debtor be avoiding the 341 meeting?


NOTE: At the previous 341 Meeting for the initial Chapter 11 case [which was then converted] nothing of substance was asked or discussed ... so I doubt anything meaningful would come of this 341 meeting.

[justbroke]

Can someone avoid a 341 meeting or not show up in hopes of getting the involuntary Chapter 7 case dismissed?

It depends on the Trustee as to whether the Trustee will allow the Chapter 7 to be dismissed. If there are assets, the Chapter 7 Trustee can just administer the Chapter 7 just as if the debtor participated.

I'm a creditor in a Chapter 7. The Debt was obtained by Fraud and in a Dissolution of Marriage so it should not be able to be discharged. In short the debtor committed Fraud and was caught and ordered by the Court to repay the Fraud. Now the debtor wants to get the BK case dismissed in order to avoid repaying their fraud debt through bankruptcy court.

I know this isn't the answer your want to hear, but it depends. From what I know, as a person who divorced while in an active Chapter 13, it will depend on the type of debt from a dissolution of marriage. Generally, things such as maintenance, support, etc are not dischargeable, but other things may be. If the debt is owed to the former spouse, then it likely won't be dischargeable either. But

The Chapter 7 debtor has requested and received, the 4th continuance to the 341 meeting. The 341 meeting that was initially due in April is now continued to June.

The debtor or the Trustee "continued" the meeting? Generally, the debtor can't seek a rescheduling of a 341 Meeting without a serious issue preventing them from attending (out of country, military orders, incapacitated, etc.). The Trustee, however, can continue the meeting. However, the case will still discharge 60 days after the date of the first scheduled 341 Meeting as shown on the Notice of Bankruptcy.

Is the Debtor just hoping to get this dismissed since a discharge of the debts is likely not possible?

If there is an issue with the discharge itself, it would be the United States Trustee (UST) seeking to dismiss the case. Without the UST being involved, there likely wouldn't be a dismissal since the UST is the person (entity) that deals with dismissals or forced conversions.

Is there any way to prevent a dismissal if the debtor fails to ever show at the 341 meeting?

No. This is up to the Chapter 7 Panel Trustee and the UST.

Why else would the debtor be avoiding the 341 meeting?

Just because a meeting is continued doesn't mean it's the debtor. This is usually the Trustee seeking more information.

NOTE: At the previous 341 Meeting for the initial Chapter 11 case [which was then converted] nothing of substance was asked or discussed ... so I doubt anything meaningful would come of this 341 meeting.

If you are an actual creditor then you should seek representation in the Chapter 7 to see what you should do. That could include filing a dischargeability complaint (for the specific debt), or seeking a ruling on whether the debt is discharegeable.

Logically speaking, there's no reason to convert a Chapter 11 to a Chapter 7 if all the debtor wanted was a dismissal. They could have just voluntarily dismissed their Chapter 11.

I hate to say this, but time is of the essence. The discharge will come as soon as practical on or after the 61st day following the first scheduled 341 meeting, unless the UST moved to "extend the deadline" so that the UST can file a complaint to dismiss. You should be represented in this case, especially if you are a creditor. You need to know and protect your rights.

[Mistral]

Thank you - There are significant assets so I really hope the UST will not dismiss... but I'm getting worried after having gone through 6 weeks of continuances of the 341 meeting.

The Divorce was completed, final judgment filed - 2 months prior to the BK filing.
The initial filing was a Chapter 11 - but a C11 Trustee was imposed by the Court [against debtor's objections] and the C11 trustee then converted to a C7 [against debtor's objections]. Debtor has wanted a dismissal from the start now that the assets have been hidden as debtor doesn't want BK Court to claw back the hidden assets.

There is now a C7 trustee who has apparently granted 3 continuances of the 341 meeting. [(i) Debtor's attorney was busy, (ii) debtor was not available, (iii) I don't know the 3rd reason].

I did file an objection to discharge complaint in the original C11 case - do I need to file a new objection to discharge in the converted C7 case?
I did file a proof of claim in the original C11 case - do I need to file a new Proof of Claim in the converted C7 case?

[justbroke]

I can't advise on your dischargeability complaint (adversary proceeding/AP). I converted from Chapter 13 to Chapter 7 but my conversion was not forced by the Chapter 13 Trustee (similar to the Chapter 11 Trustee since they are both reorganization chapters). This seams as though the Chapter 7 conversion was forced by the Chapter 11 Trustee or the UST. If there is bankruptcy fraud, the UST will refer to the U.S. Attorney for possible prosecution. There are many reasons that the UST/Trustee could move for conversion, including debtor's failure to pay domestic support obligations.

Since you say that this was the UST/Trustee forcing the conversion to a Chapter 7, I'm pretty sure that the case will not be dismissed and a liquidation will be forced. The delays by the debtor may just be that... delays. The debtor may be trying to assess the end-result of these actions. Too much to speculate.

I would hope that you were represented by an attorney that is keeping up with this and making sure that you are meeting any deadlines. If there are assets, the Chapter 7 Trustee is likely to send out a notice to all the creditors establishing a claims bar date, and demanding claims by a certain date. I can't say whether you need to file a new claim, since technically it's the same filing (a conversion keeps the same filing date).

This appears to be a complex case just from the fact that it's a Chapter 11. (A Chapter 11 is a super-sized Chapter 13, by comparison. Although Chapter 11s are typically used by businesses, including multi-billion dollar businesses, they are also used by those with many assets including high-net-worth individuals with more than about $1.7M in assets. So these types of Chapter 7s may be complicated as well.

(If you did file a dischargeability complaint -- an adversary proceeding / AP -- then what is the status of the AP? Did you have a scheduling/management conference? Are you represented? Do you know how to prosecute an AP if you are not using an attorney?)

[Mistral]

I can't advise on your dischargeability complaint (adversary proceeding/AP). I converted from Chapter 13 to Chapter 7 but my conversion was not forced by the Chapter 13 Trustee (similar to the Chapter 11 Trustee since they are both reorganization chapters). This seams as though the Chapter 7 conversion was forced by the Chapter 11 Trustee or the UST. If there is bankruptcy fraud, the UST will refer to the U.S. Attorney for possible prosecution. There are many reasons that the UST/Trustee could move for conversion, including debtor's failure to pay domestic support obligations.

Since you say that this was the UST/Trustee forcing the conversion to a Chapter 7, I'm pretty sure that the case will not be dismissed and a liquidation will be forced. The delays by the debtor may just be that... delays. The debtor may be trying to assess the end-result of these actions. Too much to speculate.

I would hope that you were represented by an attorney that is keeping up with this and making sure that you are meeting any deadlines. If there are assets, the Chapter 7 Trustee is likely to send out a notice to all the creditors establishing a claims bar date, and demanding claims by a certain date. I can't say whether you need to file a new claim, since technically it's the same filing (a conversion keeps the same filing date).

This appears to be a complex case just from the fact that it's a Chapter 11. (A Chapter 11 is a super-sized Chapter 13, by comparison. Although Chapter 11s are typically used by businesses, including multi-billion dollar businesses, they are also used by those with many assets including high-net-worth individuals with more than about $1.7M in assets. So these types of Chapter 7s may be complicated as well.

(If you did file a dischargeability complaint -- an adversary proceeding / AP -- then what is the status of the AP? Did you have a scheduling/management conference? Are you represented? Do you know how to prosecute an AP if you are not using an attorney?)

Thanks for your feedback - I'm sorry you had to go through your own BK - you learned at the school of Hard Knocks.

I do have an attorney - but those who have worked with attorneys understand it's not always perfect or pleasant. Attorneys are prompt at billing and demanding payment but not always prompt at responding to questions or resolving issues. Oftentimes attorneys create as many questions and issues as they resolve.

The various AP are pending and scheduled for hearing in the future.

I think anyone can file a Chapter 11 - in this case it was chosen because the debtor wanted to retain control of their assets and prevent collection - but their debts were too large to qualify for C13 [C13 limit for unsecured debts is less than $394,725].

[justbroke]

I think anyone can file a Chapter 11 - in this case it was chosen because the debtor wanted to retain control of their assets and prevent collection - but their debts were too large to qualify for C13 [C13 limit for unsecured debts is less than $394,725].

I don't think anyone in their right mind would file a Chapter 11 over a Chapter 13. The expense of a Chapter 11 can be enormous when you do this through an attorney. That's why you want to stay under both the unsecured and secured debt limits (combined they are just under $1.7M -- $419,275 unsecured and $1,257,850 secured). A Chapter 11 can be involuntary, but individuals usually file a Chapter 11 because they don't qualify under the debt limits for a Chapter 13. I was almost a Chapter 11 myself and was lucky not to need the complexity of this type of bankruptcy.

Bankruptcy can be simple or complex. If there are new questions of law and questions on dischargeability, then it can become expensive to litigate. The attorneys may just not know and that's why you filed a complaint (AP) to determine and/or deny dischargeability for your claim. When it comes to a Chapter 11, yes it can be expensive. Now that you're in a Chapter 7 it may not be less expensive, but it certainly will cost money to get your dischargeability complaint to a judgment.

I wish you luck.